A beneficiary deed is a type of real property deed used to transfer
property. By signing and recording a beneficiary deed, an owner of
an interest in real property may cause the owner’s interest in the
real property to be conveyed to people or entities on the owner’s death.
The interest in real property conveyed by a beneficiary deed does not take
effect until the death of the owner, at which time that interest transfers
automatically by law to the designated grantee(s) named in the beneficiary
deed. A beneficiary deed takes the property out of the probate process as ownership is transferred upon death and no longer part of the decedent’s estate that might go through probate or pass under a will.

A beneficiary deed typically avoids the cost and delay of probate because
the property is not part of the probate estate of the deceased owner. However,
the property is usually included in the deceased’s estate for estate tax
purposes. Because it is not a present transfer of property, gift taxes
may not apply. It is also less complex and expensive than setting up a
trust. However, a trust may still be desirable in certain situations, such
as when the beneficiary is a minor, when multiple beneficiaries will own
undivided interests in the property, or when property is owned as joint
tenants with right of survivorship. State laws governing beneficiary deeds
vary by state, so local laws should be consulted.